The CFTC Commitments of Traders report in the week ended June 25 shows that NET LENGTH in USD Index declined -6 183 contracts to 22 366. Speculative long positions fell -5 992 contracts while short positions added +191 contracts during the week. DXY index plunged to the lowest level since March while expectations of a Fed funds rate cut in July soared about 70%. All other major currencies stayed in NET SHORT positions.
Concerning European currencies, NET SHORT for EUR futures added +3 965 contracts to 56 295. NET SHORT for GBP futures rose +6 373 contracts to 58 937. Speculative long positions fell -1 096 contracts while speculative shorts rose +5 277 contracts for the week. GBP is expected to remain volatile in the near- to medium- term. Jeremy Hunt and Boris Johnson have become the final two MPs vying to be Tory party leader, and the Prime Minister of the UK. Opinion polls show that Johnson is leading. Although we do not expect a no-deal Brexit to materialize, Johnson’s victory would inevitably raise the possibility of a hard Brexit.
On safe-haven currencies, Net SHORT for CHF futures added +997 contracts to 16 481. NET SHORT for JPY futures plunged -6 418 contracts to 10 147 during the week. Speculative long positions gained +2 921 contracts while shorts also dropped -3 497 contracts.
On commodity currencies, NET SHORT for AUD futures added +1 457 contracts to 66 320. Speculative long positions decreased -12 826 contracts while shorts also declined -11 369 contracts. Aussie should remain under pressure as the the expects RBA to continue cutting interest rates later this year. Separately, NET SHORT for NZD slipped -415 contracts to 24 053 contracts last week. NET SHORT for CAD futures slumped -23 281 contracts to 14 790.